Microsemi plans $300 million incremental term loan for Vitesse buy

By Sara Rosenberg

New York, March 18 – Microsemi Corp. has received a commitment for a $300 million incremental term loan due Feb. 19, 2020 to help fund its acquisition of Vitesse Semiconductor Corp. and repay existing debt at Vitesse, according to an 8-K filed with the Securities and Exchange Commission on Wednesday.

Bank of America Merrill Lynch is the lead arranger and bookrunner on the deal.

Pricing on the incremental term loan is expected at Libor plus 275 basis points with a 0.75% Libor floor, the filing said.

Amortization on the term loan is 1% per annum.

Other funds for the transaction will come from cash on hand and possibly revolver borrowings.

At close, debt to adjusted EBITDA will be around 3.2 times but the company plans to reduce that number to less than 2.5 times by the end of its fiscal year 2016.

Under the agreement, Vitesse is being bought for $5.28 per share through a cash tender offer. The total transaction value is about $389 million.

Closing is expected in Microsemi’s fiscal third quarter, ending June 28, subject to the tender of at least a majority of the outstanding shares of Vitesse’s common stock and certain regulatory approvals, including the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act.

Vitesse has a “go shop” period through April 7.

Microsemi is an Aliso Viejo, Calif.-based provider of semiconductor and system solutions for communications, defense & security, aerospace and industrial markets. Vitesse is a Camarillo, Calif.-based designer of semiconductors, application software, and integrated turnkey systems solutions for carrier, enterprise and Internet of Things networks.

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